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AUD remains under pressure

Published March 6, 2019

By Nicholas Cork

AUDUSD has spent the last 24 hours below 71 cents, the first time since the ‘flash crash’ on the 3rd Jan.  The RBA came and went with no  change for the 31st month in a row, with the statement a touch dovish towards inflation offset by hawkishness around employment. The AUD tried to break higher after the announcement but failed miserably, and spent the rest of the session consolidating within 0.7060/0.7090.  This morning RBA Gov Lowe speaks on “the housing market and the economy”, very timely in this environment.

China yesterday announced a lower growth target of 6% -6.5%, a cut in taxes and a boost in lending, with the target still impressive in the current environment but becoming widely unbelieved from even within China where some analysts are saying more likely 1.5% – brave call from within.

China has also overnight blocked Canadian canola shipments in what is seen as an escalation of recent tensions, and as Canola accounts for 17% of Canadian exports it is not insignificant. The Canadian Foreign Minister said “we do not believe there is any scientific basis for this… we are working very, very hard with the Chinese government on this issue.” Which to me sounds similar to the recent coal hold up, and if so will this become the new way forward for Chinese foreign policy?

AUDUSD drifts lower (Reuters)